Gas prices have nation fuming

WASHINGTON -- Rolling up on the Memorial Day weekend with gas prices at record highs, the cash-strapped Michigan family may be thinking about leaving the car in the garage and the boat on the trailer.

Even Congress is fretting.

Lawmakers are so worried about bloated gas prices that they've launched a series of investigations into whether the nation's oil companies are gouging consumers in order to boost profits.

``You'd think with all the hue and cry from the public, the oil companies would start rolling back these prices, sooner rather than later,'' said U.S. Rep. Bart Stupak, the Menominee Democrat who will chair a hearing this week looking into high gas prices.

And that's the central issue in the halls of Congress right now. Are the oil companies artificially inflating prices to boost profits? Or are they victims of the same supply-and-demand price fluctuations that the general public is feeling?

Consumers are likely to see some price relief in the coming weeks as gasoline inventories improve and refineries catch up with demand, but any long-term, significant reduction in gas prices will have to come from Washington.

Demand in the United States is growing, and the U.S. refineries, which refine the crude oil into gas, cannot keep up. Political problems in Nigeria are keeping that country's oil output low, and Middle East nations are choosing to limit their crude-oil exports at the same time. Meanwhile, China's need for oil is growing, increasing demand significantly.

``It is increased demand and a limitation on imports. ... With less supply and more demand, you have higher prices,'' said John Felmy, chief economist for the American Petroleum Institute.

That's certainly true in Michigan. While the national average was about $3.10 per gallon most of last week, Michigan's average price per gallon ranged about 15 cents to 25 cents higher. The state ranks near the top nationally for high gas prices.

Bush administration officials say the problem is structural and that little can be done in Washington to change the situation.

Democrats aren't buying it. Last year ExxonMobil posted $36 billion in profits, an all-time corporate record. Refineries have increased their prices by 255 percent in the past year, Stupak said.

To combat skyrocketing prices, bipartisan legislation is pending in the U.S. House and Senate that would allow the president to declare a state of emergency when prices go too high, giving the federal government the authority to penalize companies engaging in predatory pricing or unfair market manipulation.

Another measure, sponsored by Democrats, would establish tighter controls over oil traders on commodities markets to ensure that prices aren't inflated unreasonably. It also would create penalties for speculators who are found to be manipulating the oil-futures market.

While both approaches are likely to be reviewed and even adopted in the Democratic-controlled House and Senate, they still must get by the president to become law. It's unclear whether President Bush would sign bills limiting what oil companies can charge for gasoline.

``When you look at gasoline in terms of income levels here and against world prices, gasoline in the United States remains cheap,'' said Paul Sankey, a leading oil analyst with Deutsche Bank, the German banking giant.

"Another measure, sponsored by Democrats, would establish tighter controls over oil traders on commodities markets to ensure that prices aren't inflated unreasonably. It also would create penalties for speculators who are found to be manipulating the oil-futures market."